Rural Finance and Investment Insights: May 2017

In this Issue

From the Editor

Dear RFILC members,

We would like to open this newsletter with the policy document “Climate Smart Financing for Rural MSMEs: Enabling Policy Frameworks” that was produced jointly by GIZ, the World Bank Group and the German Federal Ministry for Economic Cooperation and Development (BMZ) for the G20 Global Partnership for Financial Inclusion. The document presents a synthesis of the key lessons linked to climate change-related needs and solutions for MSMEs in developing countries, with an emphasis on the implications for governments and development agencies. The paper addresses the issues surrounding rural and agricultural MSMEs and the constraints they face related to finance and investment, while also assessing the gaps that limit the development of climate smart MSMEs. The document also showcases climate smart adaptation and mitigation solutions for MSMEs, by illustrating some of the modern views on climate financing issues, as well as relevant lessons derived from the field of sustainable energy financing. It then illustrates a number of potential ways forward, together with policy implications linked to the adaptation process. The document also presents opportunities that can be realized by adopting new climate smart technologies as well as green finance and investment modalities. Finally, the publication showcases a number of key policy messages, which highlight that climate smart adaptation and risk mitigation policies need to establish an enabling environment for change, while also providing incentives to build capacity and facilitating financing and investment. Blended finance, partial guarantee schemes and insurance support may be required to incentivize financial institutions to lend, as well as to increase rural MSMEs’ capacity to borrow. Private financial institutions must play an important role in climate smart financing, and public financing schemes can help “crowd in” their participation.

The second highlight of this bulletin is the cross-country study on “Agricultural Leasing Market Scoping Study for Sub-Saharan Africa”, realized by Nathan Associates and Financial Sector Deepening (FSD) Africa. The study, on one hand, aims to act as a reference for stakeholders working in the domains of agricultural finance and leasing, hence supporting the development of well-informed interventions and strategies for agricultural leasing. On the other hand, it aims to inform FSD Africa’s own market-building interventions and activities. Within the document, a country selection framework analyzes the breadth of the financial sector, the relative importance of agriculture within the overall economy, the total employment provided by the agriculture sector, as well as the presence of major agricultural equipment suppliers and leasing companies. It has led to a closer analysis of the following countries: Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Zambia. Additional references have been made to South Sudan and Liberia, offering general insights on agricultural leasing in a selection of fragile and conflict-affected states (FCAS), as well as to Rwanda. For the key findings, click here.

Finally, the Global Forum on Remittances, Investment and Development 2017 (GFRID) will be held at the United Nations headquarters in New York on June 15th and 16th. It is organized by IFAD in collaboration with the World Bank and the United Nations Department of Economic and Social Affairs (UN-DESA). The Forum coincides with the celebration of the International Day of Family Remittances (IDFR), on the 16th of June. The Forum brings together key decision makers from the public and private sectors, as well as the civil society, who work in the field of migration and remittances. The event will contribute to improved global governance and enhanced coordination of remittances and migrant investment, in the pursuit of joint efforts aimed at significantly decreasing transfer costs, maximize remittances’ impact for development, and ultimately contribute to the achievement of the United Nations Global Goals for Sustainable Development. For more information, as well as to register, clickhere.

The Rural Finance and Investment Learning Centre is a part of the CABFIN Partnership Project which aims to promote and facilitate capacity building in rural finance. The concerns of rural finance are to ensure that people living in rural areas have access to financial services such as deposit and money transfer facilities, insurance and loan products. Effective use of these services can help to improve livelihoods and reduce rural poverty. The following CABFIN Partners have provided financial support to the RFILC:

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